Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan” will be posted around 9:00am EDT, every trading day.
For the Outlook, Forecast, and Trading Plans published this morning, please click here
For the last published Results of the Morning Trading Plans, please click here.
THE GIST (“THE WHAT”)
Investors remained focus on trade and economy related news headlines, shrugging off the political drama surrounding the impeachment inquiry. The S&P 500 index tumbled following reports that the Trump administration is considering delisting of Chinese firms from U.S. exchanges while limiting U.S. investment flows into China. Mixed economic data also kept sentiments subdued.
Struggling for direction during the early session, the index retreated sharply alongside plunging China-exposed semiconductor stocks which were fueled by disappointing earnings by Micron Technology Inc. Profit taking going into the weekend also sent defensive sectors lower. A late-session bounce off the 50 DMA (now at 2948.83) helped the index trim losses and close well off of session lows at 2961.79, down 15.83 points and losing 0.53% over previous session’s close.
THE DETAILS (The “How & Why”):
Technology stocks posted the biggest percentage decline, falling broadly, led by China-exposed semiconductor stocks after the Trump administration ratcheted up trade tensions ahead of the planned U.S. – China trade talks next month. Micron Technology Inc. was the worst performer of the session, plunging 11.09% following disappointing earnings and lower guidance for the holiday season.
Lam Research Corp. and Applied Materials Inc. fell more than 5% each. Activision Blizzard Inc., NVIDIA Corp and Skyworks Solutions Inc. shed more than 3% apiece. Facebook Inc. led the FAANG components lower with a 1.67% decline, weighing down heavily on the Communication Services sector lower.
The 10-year Treasury yield pared early session climb to settle slightly lower at 1.683% as investors digested a mixed bag of economic data. Consumer spending in the month of August rose 0.1%, as against the expected rise of 0.3%. Personal income also rose slightly below expectations at 0.4%. Meanwhile, lower energy prices kept the inflation growth below the Fed’s target of 2%, coming in at 1.8%.
Defensive stocks gave back some of recent strong gains on the back of profit-taking going into the weekend. Real Estate, Health Care and Utilities posted modest declines. Trade-sensitive Industrials and Materials also added to the day’s weakness.
Financials was the only sector to buck the trend and close higher by 0.24%. Wells Fargo & Co was the top gainer of the session, jumping 3.77% after the scandal-hit banking giant announced a former Bank of New York Mellon Corp. Chief Executive Charles Scharf as its new CEO. Bank of New York Mellon Corp, however, shed 4.50% on the news.